How Private, Voluntary Health Insurance Can Work In Developing Countries

Could voluntary insurance markets exist in developing countries? We used data from the World Health Survey for eleven countries to estimate, at different income levels, variation in total medical spending and spending for hospitals, physicians, and outpatient drugs. The goal was to generate estimates of risk premiums that consumers might pay for insurance coverage and to calculate likely insurance administrative costs. We conclude that insurance covering either hospital spending or total spending is feasible for much of the population, but not insurance for physician services or medicines. Spending varies by income, so insurance markets should be segmented by income. [Health Aff (Millwood). 2009;28(6):1778-87]